United States: Wind sector takes a battering
ENERGY magnate T Boone Pickens' decision to postpone plans to develop a large wind-farm project in Texas reflects continuing uncertainty in the country's wind industry, where growth has been stunted by the recession.
Pickens has spent millions of dollars promoting his plan for new energy projects, including a proposed $10bn investment in a 4 gigawatt (GW) wind farm in the Texas panhandle. But now he says funding and grid connectivity problems have made a project on that scale impractical. "Transmission issues and problems with capital markets make that unfeasible at this point," Pickens said last month. He also cited lower natural gas prices as another complication for renewables developers. A batch of over 650 turbines intended for the project, already on order from General Electric, may now be used in smaller wind projects elsewhere in the country.
The wind industry accounted for 42% of new electricity-generating capacity in the US last year. However, its rate of expansion has slowed. While around 8.5 GW of fresh wind capacity was added in 2008, only 5 GW is expected to come on line this year, according to the American Wind Energy Association (AWEA).
The financing problems common to most big infrastructure projects at the moment have been exacerbated by the lack of a sturdy enough trans-national transmission network. This must be upgraded to distribute the high levels of wind-generated electricity from the mid-west and other remote areas, where much of it is produced, to the more populous coastal states, where almost three-quarters of US electricity production is consumed. However, the necessary spending is likely to be hard to come by at a time of economic hardship and lower overall electricity demand. Last year, the Department of Energy estimated that the development of a national high-voltage network enabling the country to meet a target of deriving 20% of the country's power from wind by 2030 would cost more than $60bn. Wind supplies about 1% of US electricity at present.
The industry remains hopeful that government renewable-energy funding announced in July – fleshing out measures outlined in the economic recovery package approved by Congress earlier in the year – will provide impetus for new projects. The government said it would make $3bn available in upfront grants for renewable-energy projects, instead of providing tax credits, the benefits of which would not have been felt until after projects were built.
Denise Bode, AWEA's chief executive, says wind firms are "anxious to ramp up investments" across the country. "As with all industry, the economic conditions of the past eight or nine months have held us back. We believe these grants will help get our companies back on track," she added.
Some in the industry say its fortunes may be improved by building more wind farms closer to coastal population centres. That would mean building more offshore turbines, which are costlier than their onshore equivalents, but the proponents of this approach say the extra expense would be at least partially offset by savings on extending the onshore transmission network.